Burger King shares rise on first day back to NYSE
By CANDICE CHOI AP Food Industry Writer June 20, 2012 12:40PM
Burger King Corp. CEO Bernardo Hees, right, talks with specialist Donald Himpele, center, after his company's shares began trading on on the floor of the New York Stock Exchange Wednesday, June 20, 2012. Burger King's return to the Big Board wasn't through an initial public offering. 3G Capital announced an unusual deal in April to sell a minority stake to Justice Holdings Ltd., a London-based entity that was specifically set up to invest in another company. (AP Photo/Richard Drew)
Updated: June 20, 2012 6:07PM
NEW YORK — The New York Stock Exchange is once again the home of the Whopper.
Burger King Worldwide Inc. began trading as a public company Wednesday under the ticker symbol “BKW.” Its shares closed up 3.5 percent at $15.01.
The world’s No. 2 hamburger chain had last traded as a public company between 2006 and 2010 before it was purchased and taken private by investment firm 3G Capital.
Burger King’s return to the Big Board wasn’t through an initial public offering, however. 3G Capital announced an unusual deal in April to sell a minority stake to Justice Holdings Ltd., a London-based entity that was specifically set up to invest in another company. 3G Capital received $1.4 billion in exchange and retains a 71 percent stake in the company.
That stake was worth about $3.6 billion based on Burger King’s opening share price, meaning that, on paper, 3G Capital has more than earned back the $3.26 billion it paid for Burger King in 2010.
Under the complex deal, Justice suspended trading on the London Stock Exchange once the transaction was complete and emerged as Burger King Worldwide on the New York Stock Exchange.
Only 16 percent of shares were available for sale to investors. The founders of Justice Holdings will hold onto their 13 percent of shares for at least one year as part of the deal. 3G Capital will hold onto its stake for at least six months.
Among Justice’s founders are William Ackman, an activist investor and founder of Pershing Square Capital Management; Martin Franklin, founder and executive chairman of consumer products company Jarden Corp.; Alan Parker, former CEO of Whitbread PLC, the United Kingdom’s largest hotel and restaurant company; and investor Nicolas Berggruen.
Franklin and Parker will join Burger King’s board as part of the deal. 3G Capital has said that no other changes will be made to the senior leadership and that the company will continue its focus on turning around the brand.
As the fast-food market becomes increasingly crowded at home, Burger King like other companies has focused on expansion overseas. The Miami-based company recently announced plans to open hundreds of new restaurants in Russia and 1,000 in China over the next several years. That’s in addition to similar expansion plans for Brazil.
In the past year, 80 percent of new store openings were in Europe, the Middle East and Africa.
Back in the U.S., Burger King — long known for its “Home of the Whopper” tagline — has been working to refresh its outdated image and win back lost market share. The company launched its biggest menu expansion ever in April, with items including fruit smoothies, specialty salads and coffee frappes. The chain is abandoning its strategy of courting young men and going after a broader customer base of moms and families.
The strategies at home and abroad will remain in place now that Burger King is a public company, says Daniel Schwartz, the company’s chief financial officer and a partner with 3G.
“We have a situation where the value of the brand is so much bigger than the value of the business,” he said. For example, he noted there is a long list of countries with dense populations where the chain has a limited presence despite its global recognition.
Burger King has more than 12,500 restaurants worldwide, compared with 33,000 for McDonald’s Corp.